Bought to close GME 02/12/2021 19.00 Puts @ 0.01. Sold these on 02/04 at 0.40 & 0.46
Bought to close GME 02/12/2021 20.00 Puts @ 0.01. Sold these on 02/04 at 0.52,0.54 & 0.83
Author Archives: Option Iceman
TLRY
Bought to open TLRY Mar 19 2021 14 Put / Sold to Open 1 TLRY Feb 12 2021 38 Put @ 0.05 Credit
Bought to open TLRY Mar 19 2021 13 Put / Sold to Open 1 TLRY Feb 12 2021 37 Put @ 0.10 Credit
TLRY up 20 @ 62
Just playing around a little with a new name
Will need strikes higher than 100 on the call side before I play those
GME Puts closed
Bought to close 02/12/2021 16.0 Diagonal Puts @ 0.01. They won’t trade any lower.
Sold these on 02/04 @ 0.46 & 0.47
SPY Rollup
Bought to close 1 SPY Feb 10 2021 385 Call / Sold to Open 1 SPY Feb 12 2021 386 Call @ 0.02 Credit but pushed the short up a point for only 2 more days to expiration.
VXX Calls
Used the temporary spike in VXX to 17 to sell some diagonal calls against Feb and March long positions still in the account from old spreads.
#DoubleDip
Sold VXX 02/12/2021 20.0 Calls @ 0.14
Sold VXX 02/12/2021 19.50 Calls @ 0.14
Sold VXX 02/12/2021 19.0 Calls @ 0.18 & 0.23
Sold VXX 02/12/2021 18.50 Calls @ 0.18 & 0.30
Sold VXX 02/12/2021 18.00 Calls @ 0.25, 0.30 & 0.35
VXX Contango Special
Bought to open VXX Jun 18 2021 9 Puts / Sold to Open VXX Feb 12 2021 16.0 Puts @ 0.03 Credit.
Short DTE = 3
Long DTE = 129
#VXXContango
Is Robinhood effect over?
Week ending 02/05:
Ethereum $ETH: +30%
Bitcoin $BTC: +14%
S&P 500 $SPY: +5%
Macerich $MAC: -17%
Tootsie Roll $TR: -21%
Bed Bath $BBBY: -25%
Nat. Beverage $FIZZ: -28%
Vol Index $VIX: -37%
New Concept $GBR: -39%
Express $EXPR: -48%
AMC $AMC: -48%
Koss $KOSS: -69%
GameStop $GME: -80%
VIX
$VIX futures contango settled at 10.58%
Headwind for $VXX and $UVXY
Options Expiration:
== Expired ==
GME 02/05/2021 520/530 Bear Call Spread
SLB 02/05/2021 25.50 Diagonal Calls
VXX 02/05/2021 20.0 Diagonal Calls
VXX 02/05/2021 21.0 Diagonal Calls
VXX 02/05/2021 22.0 Diagonal Call
VXX 02/05/2021 24.0 Diagonal Calls
VXX 02/05/2021 25.0 Diagonal Calls
VXX 02/05/2021 26 Diagonal Calls
WFC 02/05/2021 33.0 Diagonal Calls
GME 02/05/2021 8.0 Short Puts
GME 02/05/2021 9.0 Short Puts
GME 02/05/2021 10.0 Short Puts
GME 02/05/2021 11.0 Short Puts
GME 02/05/2021 40.0 Diagonal Put
SLB 02/05/2021 25.0 Short Puts
== Assignments ==
GME 02/05/2021 40.0 Covered Call (put the trade on this week for $38 debit)
SLB 02/05/2021 20.50 Covered Calls (dumping long stock purchased several years ago at much higher prices. Redeploying the resulting cash)
AMC
Somebody made a buck or two getting out
Ticker Top Insider Trading Date Transaction Value($)
OTLK Sukhtian Ghiath M. Feb 02 Buy 8,360,000
BDGE BASSWOOD CAPITAL MAN Feb 02 Buy 6,915,225
MSM JACOBSON MITCHELL Jan 29 Buy 5,290,780
AMC Silver Lake Group, L Jan 27 Sale 534,752,119
DCT Disco (Guernsey) Hol Feb 02 Sale 273,264,840
VXX Puts Rolled down
Bought to close 02/05/2021 17.50 Diagonal Puts / Sold VXX 02/12/2021 17.0 Puts @ 0.01 Credit
Bought to close 02/05/2021 17.0 Diagonal Puts / Sold VXX 02/12/2021 16.50 Puts @ 0.06 Credit
VXX Calls Closed
Bought to close 02/05/2021 18.50 Diagonal Calls @ 0.01. Sold on a rollup last Friday @ 2.42
Letting all the other VXX short calls expire
GME Puts closed
Bought to close GME FEB 05 2021 $23 PUTS @ 0.01. They won’t trade any lower.
Sold these yesterday for 0.18 and 0.21
SPY Close and roll
Sold to close SPY 02/05/2021 385.0 Calls @ 3.25 on the open. Bought these @ 2.67
These were excess longs from earlier bear call spreads where the short expired.
Then I rolled one of the shorts expiring today.
Bought to close Buy to Close 1 SPY Feb 05 2021 382.0 Call / Sold to Open 1 SPY Feb 16 2021 385.0 Call @ 0.03 Credit but bumped the strike up 3 points.
GME
Sold To Open GME FEB 05 2021 $40 PUT @ 1.77 while buying the GME MAR 19 2021 $10 PUT @ 0.50 to lower the margin requirements a bit.
The short expires today
GME Puts closed
Bought to close GME FEB 05 2021 $15 PUTS @ 0.01. They won’t trade any lower.
Sold these for of 0.40 on 01/29
AMC Puts closed
Bought to close AMC FEB 05 2021 $5 PUTS @ 0.01. They won’t trade any lower.
Sold these for an average of 0.36
That leaves me with long March and June strike 2 puts that are fully paid for as “lottery tickets”
Closing GME Puts
Dumped a couple more extra long Puts at a gain after the short puts sold against them expired last Friday.
Sold to close GME FEB 12 2021 $17 PUTS @ 0.80. Originally bought them @ 0.75.
#WinWin on the original spread.
GME at 56.50
Done with GME trades for today
GME
New diagonal
Bought to open GME Mar 26 2021 10.0 Put/ Sold to Open GME Feb 12 2021 20.0 Put at $0.15 Credit.
Fido calculates the Breakeven price is GME @ 17.17 (at the expiration date of the short I’m assuming)
GME Currently at 59.
Short Interest list
For Thursday
GameStop (GME) – 121.07% Short Interest
AMC Entertainment (AMC) – 78.97%
Virgin Galactic Holdings (SPCE) – 71.95%
FuboTV (FUBO) – 71.91%
Bed Bath & Beyond (BBBY) – 65.48%
Ligand Pharmaceuticals (LGND) – 64.88%
National Beverage Corporation (FIZZ) – 62.62%
SunPower Corporation (SPWR) – 57.49%
Tanger Factory Outlet Centers (SKT) – 52.41%
GSX Techedu (GSX) – 50.32%
Tootsie Roll Industries (TR) – 45.91%
Gogo Inc (GOGO) – 43.95%
Accelerate Diagnostics (AXDX) – 43.08%
Beyond Meat (BYND) – 42.89%
Ontrak (OTRK) – 42.56%
Clovis Oncology (CLVS) – 42.13%
Rocket Companies (RKT) – 40.72%
Seritage Growth Properties (SRG) – 38.69%
iRobot Corporation (IRBT) – 38.45%
GME Diagonal Puts
Bought to open GME Mar 19 2021 6.0 Puts / Sold to Open GME Feb 12 2021 18.0 Puts at $0.22 Credit
I’ve got a whole bunch of naked and hedged short puts expiring tomorrow plus I’m already long more puts than I am short.
OptionsExpiraion
SPY Feb 03 2021 383 Short Diagonal Call
GME Short Puts
Bought to close Buy to Close GME Feb 05 2021 12 Puts at $0.01 taking out of the rest of this position.
Sold these on 01/29 @ 0.38
I pulled my orders to close 8, 9, 10 & 11 short puts as they look to expire Friday. Still short some 15 puts that I’m trying to close.
VXX Put Roll
Bought to close VXX Feb 05 2021 22.0 Puts / Sold to Open VXX Feb 12 2021 22.0 Puts @ 0.20 Credit.
Just bringing in #CASH and buying more time before they get farther in the money.
Along with this trade I cancelled the orders I had in to cover short VXX calls at 22,23,25,& 26 for this week. I’ll just let them expire.
SPY Roll
Bought to close SPY Feb 03 2021 376.0 Call / Sold to Open SPY Feb 08 2021 377 Call @ 0.06 Credit but bumped the short strike up a point..
SPY = 382.85
Still have a short 383 call for today that I am letting run to the close to see if it expires
GME Puts
Bought to close GME 02/05/2021 12.0 Puts @ 0.01. It won’t trade any lower.
Sold this lot on 01/27 at 0.30
VXX Puts
Bought to open VXX Jan 21 2022 5.0 Puts / Sold to Open VXX Feb 05 2021 17.0 Puts @ 0.03 Credit
#VXXContango special
VXX 17.79
Short DTE = 2
Long DTE = 352
GME Covered Call
2nd time for this strategy in an IRA account with 100% cash.
Bought 100 GME @ 103.71
Sold 1 GME Feb 05 2021 40.0 Covered Calls @ 65.71.
Net Debit is $38.00
Looking for this to be assigned Friday to get the $200 profit
VXX Puts
new #VXXContango special
Bought to open VXX Jan 21 2022 6.0 Puts / Sold to Open VXX Feb 05 2021 17.5 Puts @ 0.06 Credit
VXX = 18.30
Short DTE = 3
Long DTE = 353
GME
from Zerohedge
GME Surges 85% ‘Off The Lows’ After Robinhood Lifts Trading Restrictions
“…in all my 6 days of trading, I have never seen anything like this…”
.. as attention now seems to be shifting to biotechs where names like VXRT, DVAX and BCRX sharply higher today.
SPY Call Spread
Bought to open 1 SPY Feb 26 2021 393.0 Call / Sold to Open 1 SPY Feb 05 2021 383.0 Call @ 0.04 Credit.
A 2 day move from 370 to 382 may be a bit overdone.
Just trying to pick up a long with a bit longer life than the calls I already own so I can write against it a few more times.
AMC Puts
Bought to open AMC Mar 19 2021 2.0 Puts / Sold to Open AMC Feb 05 2021 5.0 Puts @ 0.22 Credit
Bought to open AMC Jun 18 2021 2.0 Puts / Sold to Open AMC Feb 05 2021 5.0 Puts @ 0.07 Credit
I may have been a bit early but I can roll the shorts if I have to.
GME – How the GME…
GME –
How the GME Options frenzy could price itself out of existance
Reddit-fueled stocks ‘now have options that are very expensive, perhaps prohibitively so’: BTIG’s Emanuel
There’s an old saying among commodity traders that the cure for high prices is high prices. The same likely will prove true for options on GameStop Corp. and other highflying targets that have become popular on Reddit message boards, argued one veteran options analyst.
The idea is just Econ 101: as prices for wheat or oil or gold rise too high, users naturally use less of the product. As demand is rationed, prices eventually decline (the same idea works in reverse, with low prices seen as the cure for, you guessed it, low prices).
And so it might go after last week’s frenzied buying of call options, which give the holder the right but not the obligation to buy the underlying security at a set price by a certain time, on GameStop (GME) and shares of other heavily shorted companies, said Julian Emanuel , chief equity and derivatives strategist at BTIG, in a Sunday note.
The heavy call buying was part of an effort by an army of individual investors organized via Reddit’s WallStreetBets forum to run up the prices of the heavily shorted companies, forcing short sellers to buy back their shares and accelerating the rally. The call buying generated a feedback loop of its own as market makers, who had sold the call options, bought the underlying stocks to hedge, or neutralize, their market exposure.
More details:How an options-trading frenzy is lifting stocks and stirring fears of a market bubble (https:// www.marketwatch.com/story/a-surge-in-options-trading-is-pushing-around-the-stock-market-and-bringing-back-memories-of- the-dot-com-bubble-11611618636)
The strategy, as anyone paying the slightest attention last week to markets or the news knows, seems to have worked quite nicely. GameStop shares soared 400% last week to end Friday at $325 after touching a high above $500 on Thursday. GameStop ended 2020 near $18 a share.
Given those gyrations, implied volatility — one measure of an option’s cost — at an off-the-charts 1,000% proved cheap for options that expired last week, Emanuel said, noting in the chart below the surge in 3-day realized volatility.
But it’s likely to be a different story going forward, he said, arguing that options “have likely become too expensive to remain a source fueling further upside in a number of the meteoric gainers.”
To illustrate, he noted that an at-the-money call option (one with a strike price equal to the stock price) on GameStop expiring on Feb. 19 cost around half of GameStop’s actual share price, or 580% volatility. By comparison, at- the-money call on the S&P 500 , also expiring on Feb. 19 , cost 2.5% of the index’s actual price, or 26.5% volatility, he said.
Since both options were at-the-money, they had no “intrinsic value,” a measure of the option’s profitability based on the strike price relative to the share price. Instead, the premiums consisted entirely of “time value,” based on the underlying asset’s expected volatility and the time until the option expires.
The bottom line, Emanuel said, is that options on GameStop and much of GameStop’s cohort of social-media-fueled speculative stocks “now have options that are very expensive, perhaps prohibitively so.”
SPY
Bought to close 1 SPY Feb 01 2021 381.0 Call at $0.01. It won’t trade any lower.
Sold this one on 01/27 @ 3.30.
Replaced it with 1 SPY Feb 05 2021 382.0 Call at $1.27.
VXX
New #VXXContango Special
Bought to open VXX Sep 17 2021 5.0 Puts / Sold to Open VXX Feb 05 2021 17.0 Puts @ 0.04 Credit
Short DTE = 4
Long DTE = 228
KOLD BOIL
KOLD Down 20% today
BOIL Up 20%
for those watching these things
XRT
https://www.zerohedge.com/markets/gamestop-distortion-sparks-massive-collapse-retail-etf-assets
GME Diagonal Puts
Bought to open GME Feb 26 2021 5.0 Puts / Sold GME Feb 05 2021 15.0 Puts @ 0.05 Credit.
Stock at 315
Just hoping to pick up a long put with a longer expiration date for free.
GME eventually implodes once the #wallstreetbets crowd sees something else shiny
VXX major Call Rollups
Bought VXX Jan 29 2021 18.5 Calls / Sold to Open VXX Feb 05 2021 20.0 Calls @ 0.05 Credit – short 1.50 higher
Bought VXX Jan 29 2021 19.0 Calls / Sold to Open VXX Feb 05 2021 21.0 Calls @ 0.09 Credit – short 2.00 higher
Bought VXX Jan 29 2021 19.5 Calls / Sold to Open VXX Feb 05 2021 23.0 Calls @ 0.28 Credit – short 3.50 higher
Bought VXX Jan 29 2021 20.0 Calls / Sold to Open VXX Feb 05 2021 25.0 Calls @ 0.53 Credit – short 5.00 higher
Bought VXX Jan 29 2021 20.5 Calls / Sold to Open VXX Feb 05 2021 26.0 Calls @ 0.45 Credit – short 5.50 higher.
Done with VXX for this week.
GME
Damn – glad to be out of this
Bought to Close 1 GME Jan 29 2021 310 Call / Sold to Close GME Jan 29 2021 320 Call @ 1.00 Net Debit.
Since I put the spread on at a 2.00 point Credit, I’m thrilled with the $100 gain.
Very lucky this week 🙂 🙂 . Made $$ on all three of my GME Bear Call spreads.
GME Puts closed
Bought to close GME 01/29/2021 31.0 Puts @ 0.01.
Sold these at 0.40 as part of a diagonal spread.
GME Question
Why hasn’t the GME board authorized the issuance of a massive number of new shares to pay down all of it’s debt and put billions in the bank like Tesla has done multiple times?
TSLA
below 800 for the first time since 01/07.
The shorts are winning on this one
GME Puts
Bought to close GME 02/05/2021 7.0 Puts @ 0.01. They won’t trade any lower.
Sold yesterday @ 0.25
I may try to resell.
XRT
FWIW
The XRT 95 call expiring today is 0.70 bid / 1.00 ask with the stock at 88.40.
WFC Calls
Bought to close WFC JAN 29 2021 $32.50 CALLS @ 0.01. Sold at 0.28 on a rollup last Friday
Bought to close WFC JAN 29 2021 $32.00 CALLS @ 0.01. Sold at 0.72 on a rollup last Friday.
GME Crazy
Sold to open GME Jul 16 2021 2.0 Puts at $0.37
Yes that is the correct strike price.
#GMECrazy
ps: today’s range on the option is 0.01 to 0.37
The wonder of limit orders.
WFC Covered Rollup
Rolled this week’s WFC 30.5 Covered Call up to next week’s 31.5 Covered Call @ 0.02 Credit.
This stock’s Ex-Dividend is 2/4
SLB Covered Roll
Bought to close SLB Jan 29 2021 20.5 Calls / Sold to Open SLB Feb 05 2021 20.5 Calls @ 0.17 Credit.
I’ll keep rolling until the 2/16 Ex-Dividend date. At that point the call buyers will probably exercise that week’s covered call early taking me out of this stock in this account.
GME Bear Call spread
Bought to Open 1 GME Feb 05 2021 530.0 Call / Sold to Open 1 GME Feb 05 2021 520.0 Call @ at $2.50 Credit.
Seems like a decent chance of of making the profit since the short call is above all the trading so far.
GME Puts
Bought to close GME JAN 29 2021 $30.0 PUTS @ 0.01. Finally!!
It won’t trade any lower.
Sold @ 0.90 earlier in the week as part of a diagonal spread.
I now own the lottery ticket long put for free.
GME
Had an “I wish” order in an IRA sitting in all cash and it filled. Just saw this:
Bought 100 Shares of GME – Filled at $298.52
Sold to Open 1 Contract GME Jan 29 2021 50.00 Call -Filled at $250.52
Net Debit of 48.00 with a strike 50 covered call.
Good for a one day gain of $200 when assigned tomorrow.
( I used to do this kind of trade in TSLA a year ago. It worked 3 or 4 times)
#volatility Doe anyone have a…
#volatility
Doe anyone have a way to screen for the stocks with the highest IV or short term volatility?
Obviously GME would be on the list.
But what others?
Markets
ROBINHOOD ADDS AAL, CTRM, SNDL, OTHERS TO RESTRICTED TRADING
WFC Call Roll
Bought to close WFC Jan 29 2021 30.5 Calls / Sold to Open WFC Feb 05 2021 31.0 Calls at $0.17 Credit plus an extra 0.50 on the short strike.
GME Crazy
Sold 1 GME 02/05/2021 15.0 Put @ 1.01 with the stock at 200
#GMECrazy
GME – Out with my Credit
On the way down …
Bought to Close 1 Contract GME Jan 29 2021 100 Call – Filled at $134.00
Sold to Close 1 Contract GME Feb 19 2021 150 Call – Filled at $134.00
Sold this spread for a 2.00 Credit so happy with the result.
Eliminates a $5k risk.
UVXY
Bought to close UVXY 01/29/2021 10.0 Diagonal Puts @ 0.01. They won’t trade any lower.
Sold these on 01/26 @ 0.23.
Another #UVXYContango Trade worked and my long June 2021 puts are now free and clear.
XRT
Switching from GME to XRT diagonals
Bought to open 1 XRT Feb 19 2021 120.0 Call /Sold to Open 1 XRT Jan 29 2021 95.0 Call at $0.32 Credit.
XRT @ 93 and the short expires tomorrow so rapid decay on that side.
Premium on the XRT short was 5.02
GME Crazy
First Crazy fill of the day
Sold GME 02/05/2021 7.0 Puts @ 0.25
Better than a biotech going before the FDA
#GMECrazy
VXX
- last one
Bought to open 1 VXX Mar 19 2021 45.0 Call / Sold to Open 1 VXX Feb 05 2021 22.0 Call @ 0.25 Credit.
The short strike is a point higher than my last trade for the same net credit.
At the same time I am liquidating my remaining VXX 03/19/2021 65.0 Long Calls (left over from old diagonal spreads) @ 0.86.
Acquired these on 01/14/2021 @ 0.34.
VXX again
Tiptoeing into next week’s short calls with another position:
Bought to open 1 VXX Mar 19 2021 45.0 Call / Sold to Open 1 VXX Feb 05 2021 21.0 Call @ 0.25 Credit.
The short strike is a point higher than my last trade for the same net credit.
At the same time I am liquidating 1/2 of my remaining VXX 03/19/2021 65.0 Long Calls (left over from old diagonal spreads) @ 0.62.
Acquired these on 01/14/2021 @ 0.34.
VXX
Tiptoeing into next week’s short calls
Bought to open 1 VXX Mar 19 2021 45.0 Call / Sold to Open 1 VXX Feb 05 2021 20.0 Call @ 0.25 Credit.
Got over a point for the strike 20 short.
At the same time I am liquidating 1/3 of my VXX 03/19/2021 65.0 Long Calls (left over from old diagonal spreads) @ 0.40.
Acquired these on 01/11/2021 @ 0.36.
GME Long Put
dumped at a profit
Sold GME 02/05/2021 12.0 Put @ 0.22.
Bought this @ 0.10 as part of a diagonal put spread last week where the short put expired on Friday
VXX Put Rolldowns
Rolled down all my in the money puts in VXX a half point plus brought in cash for next week.
Rolled VXX 01/29 22.50 Puts to 02/05 22.0 Puts @ 0.05 Credit
Rolled VXX 01/29 21.50 Puts to 02/05 21.0 Puts @ 0.10 Credit
Rolled VXX 01/29 20.00 Puts to 02/05 19.50 Puts @ 0.25 Credit
Rolled VXX 01/29 19.50 Puts to 02/05 19.0 Puts @ 0.14 Credit
A sizeable lowering of risk on the put side while keeping my VXX short diagonal strangles in place.
GME
Took a page out of the @ramie77 playbook from yesterday and trying a straight BCS.
Bought to Open 1 GME Jan 29 2021 320.0 Call / Sold to Open 1 GME Jan 29 2021 310 Call at $2.00 Credit.
SPY Rolls
Bought to close 1 SPY Jan 27 2021 380.0 Call / Sold to Open 1 SPY Feb 03 2021 383.0 Call @ 1.05 Credit plus 3 points higher on the short strike.
Bought to close 1 SPY Jan 27 2021 379.0 Call / Sold to Open 1 SPY Feb 01 2021 381.0 Call @ 0.63 Credit plus 2 points higher on the short strike.
Bought to close 1 SPY Jan 27 2021 374.0 Call / Sold to Open 1 SPY Feb 03 2021 376.0 Call @ 0.67 Credit plus 2 points higher on the short strike.
GME Crazy
244 after hours high … so far
UVXY
New #ContangoSpecial
Bought to open UVXY Jun 18 2021 4.0 Puts / Sold to Open UVXY Jan 29 2021 10.0 Puts $0.05 Credit.
UVXY = 10.50
Short DTE = 3
Long DTE = 143
Last week’s long Put purchase is free and clear after last Fridays short position cover @ 0.01
OSTK BYND
I know some are playing options in these.
Overstock.com, Inc. (NASDAQ:OSTK) shares rose 22.4% to $82.48 as the company announced a partnership with Pelion Venture Partners to oversee the blockchain assets of its subsidiary Medici Ventures.
Beyond Meat Inc (NASDAQ:BYND) shares jumped 18.3% to $187.78 after the company announced a joint venture with Pepsi to develop, produce, market snack, beverage products made from plant-based protein.
GME halted
Circuit breaker halt at 114
Has resumed now
GME FIZZ EXPR M MAC BBBY
From Yahoo Finance
….. But underneath the surface, one of the wildest trading days we’ve seen in some time broke out.
GameStop (GME) remained the day’s top story, as the stock continued its unbelievable run from the ~$4 per share range back in the summer to a whopping $76.77 as of Monday’s close.
In a story published Monday, Bloomberg’s Brandon Kochkodin chronicled the ongoing relationship between Reddit’s “wallstreetbets” (WSB) forum, and shares of the struggling video game retailer. In this story we find a fundamental case for buying the stock: A character from Michael Lewis’ famous book “The Big Short” (Dr. Michael Burry), an activist investor who also founded Chewy (CHWY), and along the way a redditor named “Senior_Hedgehog” plays a major role.
Truly a tale for the modern market.
As Yahoo Finance’s Ines Ferre has chronicled, the last handful of trading sessions have centered on the clash between WSB and GameStop’s short sellers. This saga continued on Monday.
But during the session, we also saw the breakout of a market-wide strategy to pile into names that investors are betting against en masse. According to data from FinViz, more than a dozen stocks with more than 30% of their outstanding shares sold short rallied more than 10% on Monday.
In other words, betting on companies that lots of investors are betting against was the biggest driver of single-stock moves to start the week.
Shares of La Croix-maker National Beverage Co. (FIZZ) rose more than 13% on Monday; more than 60% of the company’s stock is currently being sold short.
Some retail-related names were also caught up in this trade, as mall REIT Macerich (MAC) saw its shares rise more than 21% on Monday, while shares of Macy’s (M) were up 10%. More than 30% of both companies’ shares outstanding are currently sold short.
However, not all efforts to blow out the shorts succeeded on Monday.
Bed, Bath & Beyond (BBBY) — which has a short interest north of 60% — gained 1.5% on Monday, but not before some chicanery that saw shares rise as much as 50% in late-morning trade. Shares of BBBY, we should note, are up some 200% over the past six months.
And not every single-stock surge on Monday was tied to huge short interest. BlackBerry (BB), for instance, saw its stock spike by some 28% to start the week — causing the company to issue a statement explicitly stating that it had no news to report, and therefore no explanation for the rally. Just about 7% of BlackBerry’s outstanding shares are currently sold short.
Which brings us to beleaguered retailer Express (EXPR).
With a market cap under $100 million before Monday’s trade, this is a name that rarely gets much attention in the broader market. But a 131% rally to start the week changed that.
Before Monday’s open, Express shares were rocketing and the stock didn’t move all that much after the open. On Friday, the stock closed at $1.79 per share; on Monday, Express shares closed at $4.15.
Rarely does this kind of move come and go without explanation. But on Monday, the media and Wall Street analysts were left scratching their heads to explain this one-day double of a 1990s-era suburban mall staple.
“Express has been the subject of Reddit boards where users speculated [about] whether it could be the next GameStop, the video-game retailer that surged again today,” Bloomberg reported on Monday.
Leading everyone right back to where this day started: Reading Reddit and looking for the next big thing.
GME Crazy
Bought to Open GME Feb 12 2021 17.0 Puts / Sold to Open GME Jan 29 2021 30.0 Puts @ 0.15 Credit
Bought to Open GME Feb 19 2021 15.0 Puts / Sold to Open GME Jan 29 2021 29.0 Puts @ 0.13 Credit
Paired off with my one crazy GME Call Spread
GME = 75.0 after almost hitting 160 earlier today
https://www.zerohedge.com/markets/gamestop-explodes-early-trading-nears-10-billion-market-cap-amc-next
Also holding 2 lottery tickets 02/05/2021 12.0 Puts left over from the spread I did last week.
Explaining The Action: Benzinga PreMarket Prep co-host Dennis Dick and Tim Quast, founder and CEO of ModernIR and Market Structure Edge, discussed the short squeeze trade on Monday morning’s show.
“There are people arguing with me that GameStop’s fundamentals have totally turned around and this price is justified. And I’m trying to say this has absolutely nothing to do with company fundamentals in a move like GameStop,” Dick said.
Related Link: GameStop’s Power Surge: Will WallStreetBets Or The Short Sellers Come Out On Top?
Citron Research editor Andrew Left has taken a lot of heat from critics since taking a short position and setting a $20 price target for GameStop earlier this month. Quast said the difficulties Left and other small-time retail traders face in timing these huge runs is that they don’t have access to the same real-time information that large market makers like Citadel Securities do. In addition, the market makers don’t have to play by the same rules.
“This is something that traders often don’t understand,” Quast said. “There is a market-making exemption for the Citadels and the Two Sigma’s and the Morgan Stanleys and the Goldman Sachs of the world where they don’t have to locate stock to short like you and I would…They have been granted an SEC exemption as market makers from having to locate shares. They can manufacture them.”
“This is how a stock can behave crazily. How is it possible that GameStop is up 817% prior to today…just in the last 90 days?” Quast said.
Short Interest Vs. Short Volume: Quast said there are important reasons for these exceptions to the normal trading rules for market makers, who are responsible for maintaining liquidity in the stock market. But traders must understand what’s actually going on.
“Citadel is going to know what the buy-sell balance is, and when it reaches a point of equilibrium, Citadel will shift short and we will see a mean reversion for GameStop. And the only way you will see that is by watching short volume, not short interest. It will be three weeks out of date, and it’s absolutely meaningless as a measure of float or total shares outstanding,” Quast said.
Quast said these “manufactured” shares produced by market makers are responsible for stocks like GameStop temporarily having short interest well above 100%.
Is This The End? The wild trading action on Monday comes the same day Goldman Sachs issued a note pointing out potential bubble valuations in 39 stocks. Goldman named Crispr Therapeutics AG (NASDAQ:CRSP), Snowflake Inc (NYSE:SNOW) and Plug Power Inc (NASDAQ:PLUG) among the most overvalued stocks in the market based on projected 2022 enterprise value-to-sales ratios.
At around 10 a.m. on Monday, many of the heavily shorted stocks associated with the recent squeeze began to reverse course, including GameStop. On Twitter, Dick speculated that the short squeeze trade may have finally capitulated to the upside.
“It’s cooling off rapidly in last 5 minutes. I think we just topped out,” he wrote. “We just saw ‘Peak Stupidity’ and everyone is learning the hard way right now.”
Benzinga’s Take: The GameStop run among retail traders has worked like a charm up to this point and has likely forced plenty of retail short sellers to cover their positions at large losses. However, successfully timing the entry and exit points in highly volatile short squeezes can be extremely difficult, even for professional traders.
BZ: Steve Weiss On CNBC’s Halftime Report Says Bought GameStop Puts In March Because ‘This Is All Going Down,’ Says ‘This Should Be A $2 Stock’
Sell Mortimer … Sell
VXX Spreads
Bought to open VXX 02/19/2021 38.0 Calls /Sold VXX 01/29/2021 19.0 Calls @ 0.02 Credit
Bought to open VXX 02/19/2021 33.0 Calls /Sold VXX 01/29/2021 18.0 Calls @ 0.03 Credit.
These pair off with existing VXX Put spreads.
BB Crazy
Sold to close the long Puts I owned against the short puts that expired Friday despite BB being up 45% today.
Sold to close BB Mar 19 2021 6 Puts @ 0.23.
Bought them @ 0.18 and they were fully paid for by Friday’s short.
